According to preliminary figures from Vietnam Insurance Association, the total market premium revenue in the first six months of 2022 increased 14.9% year-on-year to approximate VND118,961 billion, in which the non-life sector recorded VND34,494 billion in terms of premiums written, an increase of 14% in comparison to the figure of 2020. The life sector also witnessed a rebound with a growth of 15.7% year-on-year and achieved VND84,467 billion in premium volume.
After two years witnessing a single-digit growth, the non-life market experienced a strong recovery in the first six months of 2022 across all the lines, including health and motor insurance, which were hardest hit by the Covid-19 epidemic. The commercial lines in the meantime maintained a stable growth rate, in particular, Property increased by 13.43%, Engineering 7.75%, and Marine Cargo 17%.
As the market is witnessing a positive recovery in general, claims are expected to return to normal levels, especially in personal insurance. At the same time, property losses remain a constant concern for most non-life insurers since the first half year saw several losses with the highest estimated claim amount ever. The alarm has also been sounded for engineering insurance providers with the rise of green energy losses after a period of rapid development. In addition, it seems insurers cannot rely on investment returns as a back-up for underwriting profits. Low interest rates and stock market in downtrend have had negative impacts on investment income of insurers.
The insurance market continues to witness a diversification in distribution channels, primarily through e-commerce channels (Tiki, Lazada, Shopee) and service apps (Grab, Be, Gojek). Digital transformation is an inevitable trend, but the Covid-19 pandemic has accelerated this process more intensely and quickly. Customers nowadays have gradually become more accustomed to searching for products, shopping for goods, and claiming compensation online. Many businesses consider digital transformation as a solution for boosting growth given fierce market competition in traditional insurance distribution channels.
The digital transformation trend also impacts traditional distribution channels like bancassurance. The cooperation between insurers and banks is no longer confined to the conventional form of bancassurance distribution (selling over the counter, via bank staff, and bank consultants) but is gradually shifting to digital bancassurance. Life insurance companies such as FWD and Manulife… are doing very well in this field when they launch many bancassurance products on technology platforms. This trend is expected to continue to thrive in 2022, and non-life insurers are not out of the game with similar insurance products.